CREATING MARKETS IFC Corporate Presentation, 2018 2019
A member of the World Bank Group Provides investment, advice, resource mobilization Triple-A credit rating; owned by 184 countries Present in nearly 100 countries IFC is the largest global development institution focused on the private sector in emerging markets. 1
IFC: A MEMBER OF THE WORLD BANK GROUP IBRD IDA IFC MIGA ICSID International Bank for Reconstruction and Development International Development Association International Finance Corporation Multilateral Investment Guarantee Agency International Centre for Settlement of Investment Disputes Loans to middle-income and credit-worthy low-income country governments Interest-free loans and grants to governments of poorest countries Solutions in private sector development Guarantees of foreign direct investment s noncommercial risks Conciliation and arbitration of investment disputes 2
WORLD BANK GROUP COMMITMENTS, FY18 Total Commitments: $66.9 BN Loans, grants, equity investments, guarantees, and advice to support development Recipient- Executed Trust Funds $3.0 4.5% IFC* $11.6 17.3% 35.9% IDA $24.0 *Excluding funds mobilized from other investors ($11.7 bn) 34.4% All dollar figures are in US$ bn IBRD $23.0 7.9% MIGA $5.3 3
DEVELOPMENT FINANCE TODAY Major opportunities for mobilizing private capital to: End Poverty Boost Shared Prosperity Tackle Climate Change Advance Gender Equality 4
IFC: SIX DECADES OF EXPERIENCE Burkina Faso In mobilizing private capital for development More than $285 billion invested since our founding in 1956 The world s largest development finance institution focused on the private sector Leveraging the full range of World Bank Group capabilities Experience Matters. 5
CREATING MARKETS Sri Lanka CREATING MARKETS A comprehensive approach to tap the power of the private sector by: Establishing regulatory and policy frameworks that improve public governance and enable markets to thrive Promoting competition and innovation Achieving demonstration effects that encourage replication Introducing new solutions driven by improved technology and logistics Building capacity and skills to open new markets 6
Global Context: Meeting Development Goals in a Challenging Context More than 3 million new jobs are needed every month in Africa, MENA and South Asia Increase in working age population per month Over the next 15 years, thousands Sub-Saharan Africa 1,770 South Asia 1,020 MENA 720 Latin America and the Caribbean EAP (ex-china) 300 300 East Asia and the Pacific Europe and Central Asia -15-50 Source: World Bank and United Nations Population Division's World Population Prospects 7
Global Context: Meeting Development Goals in a Challenging Context $3 trillion per year are needed to reach SDG goals, including Investment Gaps in Reaching SDG 1 In US$ Billion 1000 800 600 400 200 Annual Investment gap (average 2015-2030) 0 Power Transport Telecoms Water Food Security Climate Change Health Education Investment (2014) Source: World Bank Group. 2017. Global Economic Prospects, January 2017 8
Global Context: Meeting Development Goals in a Challenging Context Trillions of investments needed to mitigate and adapt to climate change MIC and Mitigation UMIC emitted 45% of global CO 2 in 2014 LMIC emitted 12% Adaptation - Vulnerability to climate change Rank 1 169 Physical impacts adjusted for coping ability Source: Center for Global Development, Quantifying Vulnerability to Climate Change 9
Global Context: Meeting Development Goals in a Challenging Context Increased fragility and conflicts that are not contained by borders More countries experienced violent conflict in 2016 than at any time in nearly 30 years. 65.6 million people forcibly displaced globally. Fragility threatens to slow or reverse recent gains in poverty reduction. If current trends persist, by 2030, more than half of the world s poor will live in countries affected by high levels of violence. Source: UCDP/PRIO Armed Conflict Dataset - UNHCR Global Trends 2017, as of end-2016 - OECD 2015 10
Meeting Development Goals: The World Bank Group s Unique Positioning The WBG business model Global reach Convening Power & Partnership Country-led Financing Public & Private Knowledge maximizes development impact. 11
Meeting Development Goals: The World Bank Group s Unique Positioning The World Bank Group is uniquely positioned to mobilize domestic resources, attract private capital, and create markets. Use of public sector solutions helps to: Establish a supportive investment climate to mobilize private capital for investment in development Address market failures & reduce risks. Improve domestic resource mobilization, from tax revenues to capital markets Enhance public expenditure management IDA & IBRD IFC & MIGA Use of private sector solutions helps to: Create jobs in a sustainable manner Improve access to services, innovation and technology Demonstrate commercial viability of new markets Strengthen financial intermediation & expand local capital markets Generate tax revenues Mobilize third party capital Increase competition, set standards & improve sector performance Both private and public sector arms play an equally important role. 12
CAPITAL INCREASE A Historic Vote of Confidence $13 bn CAPITAL INCREASE In April 2018, shareholders approved a landmark $13 billion capital increase package: $7.5 billion for the World Bank $5.5 billion for IFC MORE THAN 3X PAID-IN CAPITAL This more than triples the amount of paid-in capital IFC has received since inception in 1956. IFC s annual IDA transfers have also been suspended. Along with the paid-in capital, these provides a total of $9.2 billion in new capital to support IFC operations. 13
CAPITAL INCREASE What it Means for IFC By 2030, IFC is now targeting: Increasing annual investment commitments to $48 billion ($25 billion for IFC s own account, $23 billion mobilized from others) Having 40% of these investments be in IDA countries and fragile and conflict-affected areas Making 35% of its own-account investments climate-related Scaling up on gender: investing $2.6 billion per year in financial institutions targeting women and increasing by 50% the number of women directors on companies where IFC has a board seat. 14
ASKING THE RIGHT QUESTIONS The Cascade: A Decision-Making Sequence Prioritizing Private Sector Solutions 1 2 3 4 Is there a sustainable private sector solution that limits public debt and contingent liabilities? If the answer is YES, we promote private solutions AFGHANISTAN If the answer is NO, we ask: Is it because of: Policy or regulatory gaps or weaknesses? If so, we provide support for policy and regulatory reforms. If the project requires public funding, we pursue that option The IFC-funded Rikweda raisinprocessing plant is helping 3,000 smallholder farmers by buying their produce at higher prices. Risks? If so, we assess whether World Bank Group instruments can mitigate them. 15
ACHIEVING THE BEST OUTCOMES FIJI The first developing nation to issue a $50M sovereign green bond to reduce the impact of climate change INDIA Sewage plants to clean up the Ganga River and improve water quality for millions MADAGASCAR Financing of BoViMa to revitalize the country's cattle industry and create jobs 16
IFC S TOOLS AND PLATFORMS Reducing investment risks in countries, sectors, and projects Mobilization Platforms Blended Finance The Managed Co-Lending Portfolio Program: Crowds in billions in private capital from insurance companies and others for IFC projects. IFC Asset Management Company: Manages billions in assets for investment in IFC projects. Uses small amounts of concessional donor funds to mitigate risks, opening the door to much larger amounts of private investment. IDA 18 IFC-MIGA Private Sector Window: Mobilizes private investment and contributes to creating markets in the most challenging economic environments. 17
IFC S STRATEGY Maximizing Development Impact, Maintaining Financial Sustainability Industries that contribute to productivity and growth Challenges with the largest risks and opportunities Regions with the greatest poverty and fragility IFC FOCUS 18
IFC S STRATEGY Key Focus Areas FOCUS INDUSTRIES FOCUS CHALLENGES FOCUS REGIONS Infrastructure Climate Finance Africa Agribusiness Fragility MENA Financial Inclusion Health and Education Digital Economy South Asia CROSS CUTTING: Gender, Disruptive Technology, Developing Local Capital Markets, Scaling up Mobilization SUSTAINABILITY Strong environmental, social, and governance standards are critical to IFC s business growth and development impact 19
THE POWER OF PARTNERSHIPS Host Country Governments Sovereign Wealth Funds/ Institutional Investors IFC S GLOBAL NETWORK FOR SOLUTIONS Approximately 2,000 Clients Financial Institution Clients Civil Society IFIs/DFIs Bilateral Donors/ Private Foundations 20
IFC: A VALUABLE PARTNER We help clients in good times and bad by offering: Strong capital base, commitment to sustainability A long-term partnership perspective, providing clients important countercyclical financing when commercial banks cut back Strategic and innovative advisory solutions that enable clients to strengthen their performance in a sustainable way, especially in fragile and conflict-affected areas 21
WHAT CLIENTS VALUE ABOUT IFC Results of IFC Client Survey Long-Term Partner Role Worldwide Presence Advice based on Global Expertise and Knowledge Ability to Mobilize Additional Funds Financing Not Readily Available Elsewhere Affiliation with the World Bank Group Stamp of Approval Environmental, Social, and Corporate Governance Expertise 22
WHAT WE DO Integrated Solutions, Increased Impact INVESTMENT ADVICE IFC ASSET MANAGEMENT COMPANY Loans Equity Trade and Commodity Finance Syndications Derivatives and Structured Finance Blended Finance Innovative Solutions Combining IFC s Expertise and Tools to: Help Create New Markets Unlock Investment Opportunities Strengthen Clients Performance and Impact Improve Environmental, Social, and Corporate Governance Standards Mobilizing and Managing Capital for Investment 23
INVESTMENT LOANS EQUITY TRADE AND COMMODITY FINANCE SYNDICATIONS DERIVATIVES AND STRUCTURED FINANCE Project and corporate financing On-lending through intermediary institutions Direct equity investments Private equity funds Guarantee of trade-related payment obligations of approved financial institutions Capital mobilization to serve developmental needs Over 60 co-financiers: banks, funds, DFIs Derivative products to hedge interest rate, currency, or commodity-price exposures of IFC clients BLENDED FINANCE Using donor funds to crowd in private financing 24
ADVICE TO COMPANIES Attracting private investors and partners Entering new markets Increasing impact Improving operational performance and sustainability standards Advancing gender equality TO FINANCIAL INSTITUTIONS AND FUNDS Strengthening risk management, diversifying product offerings Promoting universal access to finance, strengthening capital markets, and establishing credit bureaus and collateral registries Developing the private equity industry in frontier markets TO GOVERNMENTS Structuring public-private partnerships that improve people s access to high-quality infrastructure and basic services Implementing reforms that encourage private investment, spur growth, and create jobs 25
IFC ASSET MANAGEMENT COMPANY AMC FUNDS IFC Capitalization Fund IFC African, Latin American and Caribbean Fund Africa Capitalization Fund IFC Catalyst Fund IFC Global Infrastructure Fund China-Mexico Fund IFC Financial Institutions Growth Fund IFC Global Emerging Markets Fund of Funds IFC Middle East and North Africa Fund Women Entrepreneurs Debt Fund IFC Emerging Asia Fund IFC Asset Management Company had about $10.1 BILLION in assets under management in FY18 26
SUSTAINABILITY Critical to Client Success, Development Impact IFC s commitment to environmental and social sustainability and good corporate governance helps clients: Improve business performance Protect the environment Engage with affected communities Enhance transparency Increase impact 27
IFC PERFORMANCE STANDARDS A Global Benchmark 1 RISK MANAGEMENT Anticipate risks, avoid, minimize and compensate for any impacts. 2 LABOR Treat workers fairly and provide safe and healthy working conditions. 3 Promote energy efficiency, use RESOURCE EFFICIENCY resources sustainably, and cut greenhouse emissions. 4 COMMUNITY Protect local communities from worksite accidents and other project-related dangers. 5 6 LAND RESETTLEMENT Avoid involuntary resettlement and minimize the impact on those displaced. BIODIVERSITY Protect biodiversity and ecosystems. 7 INDIGENOUS PEOPLES Protect the rights, dignity, and culture of indigenous populations. 8 CULTURAL HERITAGE Protect cultural heritage and promote equitable sharing of related benefits. 28
IFC CORPORATE GOVERNANCE (CG) METHODOLOGY Sharing Best Practice 35 development finance institutions now follow IFC s approach, covering five key areas of risk assessment: 1 2 3 4 5 Commitment to CG: Awareness and formalization of sound practices Structure/Functioning of Boards of Directors: Board roles, composition, committee structure, procedures, director duties, and overall functioning Control Environment and Processes: Effectiveness of internal controls, risk management, internal/external audit, and compliance functions Transparency and Disclosure: Information disclosure to shareholders and markets; transparency of information and financial standards used Rights of Minority Shareholders: Treatment of investors, shareholders rights and protections, annual meeting procedures, conflict/related-party transaction policies 29
IFC S GLOBAL REACH 101 offices in 94 countries worldwide 3,921 staff (55% are based outside Washington, D.C.) 30
Cambodia DEVELOPMENT REACH OF IFC'S CLIENTS IN CALENDAR YEAR 2017 2.5 million jobs Health services to 41.2 million patients Education to 5.7 million students Improved opportunities for 3.7 million farmers 31
Egypt DEVELOPMENT REACH OF IFC'S CLIENTS IN CALENDAR YEAR 2017 62.7 million microfinance and SME loans, totalling $438.6 billion Power generated for 79.2 million people Water distributed to 18.2 million people 186.7 million people receiving phone connections 32
Kenya FISCAL YEAR 2018 HIGHLIGHTS $23.3 billion in long-term investment: $11.6 billion for IFC s own account $11.7 billion mobilized $57.2 billion committed portfolio $6.8 billion invested in IDA countries Advice: 57% of program in IDA countries, 19% in fragile and conflict-affected areas, 32% in sub-saharan Africa, 27% climaterelated. 33
FY18 LONG-TERM INVESTMENT COMMITMENTS: $23.3 BILLION 25 $23.3 bn 20 $17.7 bn $18.8 bn $19.3 bn 11.7 15 $15.1 bn 5.1 7.1 7.7 7.4 10 10.0 10.6 11.1 11.9 11.6 5 0 FY14 FY15 FY16 FY17 FY18 IFC's Own Account Mobilization 34 34
FY18 LONG-TERM INVESTMENT COMMITMENTS BY INDUSTRY COMMITMENTS FOR IFC S ACCOUNT: $11.6 BILLION Financial Markets Infrastructure Agribusiness and Forestry Health and Education 6.6% 0.8% 6.4% 4.6% 1.8% Tourism, Retail, and Property Oil, Gas, and Mining Funds Manufacturing 6.4% 8.2% 47.4% Telecommunications and Information Technology 17.8% 35
FY18 LONG-TERM INVESTMENT COMMITMENTS BY REGION COMMITMENTS FOR IFC S ACCOUNT: $11.6 BILLION Latin America and the Caribbean East Asia and the Pacific 8.7% 2.3% 21.6% Sub-Saharan Africa 17.9% Europe and Central Asia South Asia 16.9% Middle East and North Africa Global 19.4% 13.2% 36
FY18 COMMITTED INVESTMENT PORTFOLIO BY INDUSTRY TOTAL PORTFOLIO: $57.2 BILLION Financial Markets Infrastructure Agribusiness and Forestry Health and Education 8% 3% 6% 35% Tourism, Retail, and Property 8% Oil, Gas, and Mining 3% Funds 5% Manufacturing Telecommunications and Information Technology 5% 7% 20% Trade Finance 37
FY18 COMMITTED INVESTMENT PORTFOLIO BY REGION TOTAL PORTFOLIO: $57.2 BILLION Latin America and the Caribbean East Asia and the Pacific 9% 3% 22% Sub-Saharan Africa 17% Europe and Central Asia South Asia 16% Middle East and North Africa Global 18% 15% 38
FY18 ADVISORY SERVICES PROGRAM EXPENDITURES BY REGION TOTAL EXPENDITURES: $273.4 MILLION Latin America and the Caribbean East Asia and the Pacific 5% 6% 11% Sub-Saharan Africa Europe and Central Asia 15% 17% South Asia Middle East and North Africa Global 14% 32% 39
FY18 ADVISORY SERVICES PROGRAM EXPENDITURES BY BUSINESS AREA TOTAL EXPENDITURES: $273.4 MILLION Energy and Resource Efficiency Investment Climate 13% 9% Cross-Industry Areas Financial Sector 7% 22% Agribusiness 29% Public Private Partnerships 20% 40
IFC IN WESTERN EUROPE, THE MIDDLE EAST, AND NORTH AFRICA Barents Sea IFC Hub Offices IFC Operational Centers IFC Offices ATLANTIC OCEAN London North Sea Brussels Frankfurt Paris Tunis Vienna Warsaw Zagreb Sarajevo Tirana Belgrade Minsk Kiev Moscow Bucharest Pristina Sofia Black Sea Tbilisi Istanbul Yerevan Baku Aral Sea Almaty Bishkek Tashkent Dushanbe Rabat Mediterranean Sea Jerusalem Cairo Beirut Amman Baghdad Kabul Islamabad Dubai Karachi 41
IFC IN EUROPE AND CENTRAL ASIA IFC Hub Offices IFC Operational Centers IFC Offices Moscow Warsaw Minsk Kiev Vienna Zagreb Sarajevo Tirana Belgrade Sofia Skopje Bucharest Istanbul Tbilisi Yerevan Baku Tashkent Almaty Bishkek Dushanbe Kabul 42
IFC IN ASIA AND THE PACIFIC Ulaanbaatar Bishkek Tashkent Almaty Beijing Dushanbe Kabul Seoul Islamabad Kathmandu Thimphu (Bhutan) Karachi New Delhi Dhaka Hong Kong Hanoi Mumbai Vientiane Yangon Bangkok Manila Phnom Penh Ho Chi Minh City Colombo Singapore Tokyo IFC Hub Offices World Bank Group Hub Office IFC Country Offices PACIFIC OCEAN Jakarta Dili Port Moresby Honiara INDIAN OCEAN Vanuatu Suva Sydney 43
IFC IN LATIN AMERICA AND THE CARIBBEAN Mexico City Gulf of Mexico Port-au-Prince Kingston Santo Domingo Guatemala City Tegucigalpa San Salvador Caribbean Sea Managua Panama City Bogota ATLANTIC OCEAN PACIFIC OCEAN Lima La Paz São Paulo Rio de Janeiro Buenos Aires IFC Hub Offices IFC Country Offices ATLANTIC OCEAN 44
IFC IN SUB-SAHARAN AFRICA Rabat Algiers Tunis Mediterranean Sea Beirut Jerusalem Cairo Amman Dubai Dakar Bamako Conakry Freetown Monrovia Abidjan Ouagadougou Abuja Lagos Accra Douala Bangui Juba Sana a Addis Ababa Kinshasa Bujumbura Kigali Nairobi Dar es-salaam INDIAN OCEAN ATLANTIC OCEAN Lusaka Antananarivo IFC Hub Offices IFC Country Offices Johannesburg Maputo 45